New York City is currently awash with the couture elite. But what does such fabulousness cost? And is it worth it?
Even though a typical runway show only lasts about 600 seconds, fashion industry executives understand that they can still reap benefits months, even years, later. So while New York Fashion Week (BusinessWeek, 9/15/06) runway shows can rack up huge bills, fashion brands—no matter their size—can't seem to help but indulge in hefty investments in an attempt to create a memorable presentation.
As it turns out, costs don't have to be astronomical. Tracy Reese, a New York designer showing her women's wear collection on Sept. 7, is celebrating her brand's 10-year anniversary in low-key style. She's chosen to display her wares inside Bryant Park's midsize space, the Promenade, which can be rented for $36,000 (which includes lighting, a basic stage, access to the list of 3,500 registered press members, and the dozens of volunteers needed to help get everything done within the four hours allocated to each designer).
Factoring in the cost of models, additional lighting, music, and PR agency fees, Om Batheja, Reese's business partner, estimates that the show's total cost will come to somewhere between $90,000 and $100,000, a price that has been fairly consistent for the past six years.
More Money For More Muscle
For the first years of the label's existence, Reese chose not to stage a runway show at all. "We thought shows were intangible and we didn't need to have a presence," remembers Batheja. But after four years of so-so business, the partners realized that staging a runway show was the only surefire way to get on the fashion world's radar. Since their first show, they've sold substantial amounts of inventory to department stores such as Nordstrom (JWN) and Neiman Marcus, while this year Batheja has his sights set on Japan's tony Hankyu (HNKDF) store. "A show signaled potential buyers to take us more seriously as a brand," he says.
For Nautica's (VFC) first runway show in three years, 350 guests showed up at Bryant Park's smallest venue, the Salon, which costs about $25,000. But the label's expenses were higher because of props. Its intricate set-design included a Plexiglas runway intended to look like ocean water, a matching backdrop, an elaborate team of videographers and photographers, and bulkier-than-usual male models (who were harder to find and book).
"It's like having a white canvas," says Mirian Lamberth, Nautica's creative director, of showing in Bryant Park. In other words, the venue acts as the foundation on which a brand can then demonstrate its creativity.
Recouping the Investment
Of course, not all designers opt to take part in the organized chaos at Fashion Week's official venue in Manhattan's Bryant Park. A number of years ago, after several years of small-scale fashion shows, Robert Duffy, business partner of then little-known fashion designer Marc Jacobs, invested the equivalent of $160,000 in a customizable system of bleacher-style seats.
Since then, those same bleachers have regularly been pulled out of storage and set up in locations such as the 69th Regiment Armory to seat the throngs of press and buyers that attend every show. And even though the initial investment seemed steep, Duffy, now the president of LVMH (LVMH)-owned Marc Jacobs International, says that it was paid for within several years by sales from the shows.
These days, the pair continue to invest in Fashion Week festivities (including two shows, on Sept. 10 and 11), and Duffy estimates costs at "less than a million [dollars]." For Duffy, it's well worth it, with one runway presentation neatly setting the tone and defining the brand image for the company—and the season ahead. "If you have [any] large-size business, you have to have a meeting and a presentation of some sort for your employees," says Duffy, adding that 600 of the 1,500 visitors to this year's show already work for the company, with some of them flying in from other parts of the world. In other words, above and beyond the publicity opportunities, the show provides a handy internal update, too.
The Movie About the Show
"[The show] gives tools to the merchandiser in China, to the buyer in Korea, to the display person in India—I can't even think of a more economical or easier way to go," says Duffy. Along with the actual costs of the runway production, the company also makes a documentary DVD of preparations to further help everyone from employees to buyers understand the brand.
But even smaller expenses can add up. Late-night meals needed to sustain the staff during long hours in the run-up to the event amounted to $1,800 for Tracy Reese; delivering the 2,000 invitations cost $3,200. Shoes and accessories for the models are another expense. Designers for Puig label Carolina Herrera commission about 50 pairs of custom-designed Manolo Blahnik high heels each season—a style-based decision that can easily tot up to more than $10,000.
Increasingly, designers have been looking for innovative ways to distribute and minimize their own costs. For designers, sponsorships are key. It's in part due to sponsorships from the likes of American Legacy Foundation and Sally Hansen cosmetics that Tracy Reese's Betheja says the cost for shows hasn't substantially increased since their first show in 2001. Through less formal partnerships, designers can get everything from free make-up to celebrity hairstylists to models wanting the chance to walk in a prominent designer's show.
And for even less financial commitment, other sponsors can include products in the sought-after gift bags given to guests in order to gain exposure. This year, Tracy Reese's only gift-bag cost was for the shopping bags printed with the label's logo—the value of the products inside totaled between $500 and $1,000.
This year's shindig sees the most sponsors yet. That has led to muttering and bubbling discontent, with lead sponsor Mercedes-Benz (DCX) leading the charge. Upset that its name is regularly cut from press coverage of the week (the official name is Mercedes-Benz Fashion Week New York), Geoff Day, Mercedes-Benz's director of communications and events, warns of potential disgruntlement from supportive brands unhappy to share the limelight with all and sundry. "There is some kind of sponsorship fatigue, because every event now comes with some kind of sponsor," he says.
There are seemingly even more sponsors outside the tents and shows themselves. And since many designers are reluctant to tack on another expense, the lavish after-parties are often sponsored by brands—from retailers to liquor or publishing companies. This season, Pablo Deechevarria, senior vice-president for marketing at Perry Ellis (PERY.O), said that throwing a party with Out magazine allowed him to minimize costs.
The Best Advertising
Sometimes the public relations fee for parties doesn't need to be accounted for, while celebrity guests can still do wonders for a label's bottom line. Confirmed guests for Marc Jacobs' after-party include Victoria Beckham, Sean Diddy Combs, and Winona Ryder. This kind of celebrity wattage often brings in even more sponsors—and attention. "If it was a cost I wouldn't do it," says Duffy of the upcoming soiree.
Then, of course, the editorial coverage a fashion week show receives can prove more lucrative than any other form of advertising. Even though it's difficult to quantify the exact value of a show, Perry Ellis' Deechevarria estimates that 700 print editorials featured the label since last season. That's enough publicity to have a major impact on sales and the company's bottom line. "Multiply 700 times $27,000, the average price of a magazine ad," he says. "That gives you an impression." As do the shows.